REGISTERED NUMBER: 13904281 (England and Wales)

Group Strategic Report, Report of the Director and

Consolidated Financial Statements for the Year Ended 31 May 2025

for

Pruce Newman Group Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Director

5

Report of the Independent Auditors

7

Consolidated Income Statement

11

Consolidated Other Comprehensive Income

12

Consolidated Balance Sheet

13

Company Balance Sheet

14

Consolidated Statement of Changes in Equity

15

Company Statement of Changes in Equity

16

Consolidated Cash Flow Statement

17

Notes to the Consolidated Cash Flow Statement

18

Notes to the Consolidated Financial Statements

20

DIRECTOR:

J M Key

REGISTERED OFFICE:

C/o Pruce Newman Pipework

Ayton Road

Wymondham

Norfolk

NR18 0QJ

REGISTERED NUMBER:

13904281 (England and Wales)

AUDITORS:

Sygma Chartered Accountants

1 Sopwith Crescent

Wickford

Essex

SS11 8YU

The Directors present the strategic report on the affairs of the group of companies comprising Pruce Newman Group Limited, Pruce Newman (Holdings) Limited, Pruce Newman Pipework Limited and Pruce Newman Properties Limited, for the trading period ending 31st May 2025.

The group is structured such that Pruce Newman (Group) Limited is the 100% parent owner of Pruce Newman (Holdings) Limited which in turn is the 100% parent owner of Pruce Newman Pipework Limited and Pruce Newman Properties Limited. Pruce Newman Pipework Limited is the only trading company in the group and Pruce Newman Properties Limited owns the property from which the business operates. In the trading period ending 31st May 2025 neither Pruce Newman Group Limited, Pruce Newman (Holdings) Limited nor Pruce Newman Properties Limited carried out any trading activities, and all revenue was generated by the trading business Pruce Newman Pipework Limited.

REVIEW OF BUSINESS

The 2024-25 trading year gross turnover has decreased since the previous trading year from £9.19 Million to £8.76 Million by 31st May 2025. There were several projects throughout the financial year that were unable to recover cost which resulted in the business delivering trading losses for the year.

Our business plan indicated that Gross profit for 2024-25 should be targeted at £2.54M on a £10.7M target turnover (GP of 23.7%) and this in fact fell to £1.8M on the actual turnover of £8.76 Million (GP of 20.5%).

Overheads for the year decreased by 11.3% compared to the previous year. They totalled some £2.117M resulting in an operating loss of £340,702. The fact that the directors we able to reduce the overheads helped to minimise the operating loss.

Looking forwards the company is confident of busy in Q1 of the new financial year but expecting downturn in business during the autumn Q2 and beginning of Q3, with prospects of work picking up late Q3 & Q4, as our client base work is seasonal and not many known large projects exist between our clients.

PRINCIPAL RISKS AND UNCERTAINTIES - MACRO-ECONOMIC FACTORS

Brexit

The group will continue to be affected by the ongoing evolution of the country's trading relationship with the EU and the wider world, it is apparent that materials and plant availability will be an ongoing issue as will material and equipment pricing fluctuations both of which will have to be dealt with in formal quotation and contract documentation which we already have in hand. Also, the supply of skilled work force has reduced dramatically and affected the availability of skilled tradesmen. To counter this our business is actively engaging in training apprenticeships and in house training schemes.

Ukraine Conflict

The 'Special Military operation' being undertaken by the Russian government in the Ukraine has had a major impact in the cost of fuel and energy prices, together with the ability for us to obtain raw materials from abroad, with restrictions on materials sourced in the Russian federation. On the flip side the conflict has also provided us business opportunities where large scale new energy saving projects have become an important part of our clients' focus.

PRINCIPLE RISKS AND UNCERTAINTIES - MACRO-ECONOMIC FACTORS

Health & Safety

The company's reputation for strong Health and Safety performance has been tested over recent years, not least by the fatality suffered in 2018, and although Pruce Newman was found not to be at fault for this tragic accident, it has made us realise the fragility of our reputation.

The company is still scoring highly in third party audits which means the company maintained its ISO45001 status.

Directors all hold NEBOSH certification, all contracting staff are qualified to IOSH Managing safely and site staff hold IOSH Working safely.

Quality

The group is very reliant on its ability to deliver high quality services to its clients and its reputation is vital in this regard. Our QA department has succeeded in raising quality measures across the board and our continued accreditation for ISO 9001, ISO 1090 and ISO3834 together with PED module D and with 3rd party assessors reflects this.

Service Provision

The group trades on its ability to deliver a highly responsive and bespoke service to its clients, which is evident from its long-term trading relationships with them. The directors have been working hard on succession planning and on-boarding of graduate and experienced engineers and supervisors to maintain this reputation.

Commercial Risk

The group operates in a highly price competitive industry and so strong estimating and project cost management procedures are vital. The company has well proven estimating procedures with major tenders vetted by directors. The company's business plan also leads it towards a more value led, and less cost led client base, and this is reviewed regularly.

Credit Risk & Cashflow

The group carries out credit evaluations of new clients and constantly reviews client payment terms to ensure that credit exposure is minimised, it also has a robust cashflow monitoring process and ensures that the group's credit line is strong and conservative for its needs.

FUTURE DEVELOPMENTS AND GOING CONCERN

The group is still keen on expanding its client base in its target markets of chemical, agrichemical, petrochemical (fuel storage and on and offshore Oil & Gas industries), sugar, and power generation industries. It believes that a wider spread of clients in these industries, where its strong reputation for quality, safety and service provision, will be valued ahead of cost factors. The company will carefully consider expanding on its client base to ensure that it does not impact on its existing clients.

In addition, it is continuing with its continuous Improvement and staff engagement projects which together with its sales strategy will ensure the profitable and sustainable growth of the group.

The directors have prepared budgets for revenue and costs for the coming 12 months along with cashflow forecasts, which together indicate that the group will continue to trade and within its current cash resources. Therefore, the directors have a reasonable expectation that the group will have adequate resources to meet its liabilities as they fall due for the foreseeable future and have consequently adopted the going concern basis in preparing these financial statements.

ON BEHALF OF THE BOARD:

J M Key - Director

9 October 2025

The director presents his report with the financial statements of the company and the group for the year ended 31 May 2025.

PRINCIPAL ACTIVITY

With regards to the group's revenue producing trading activity, the group has continued to concentrate on its core skills in the fabrication and installation of bespoke piping systems for the chemical, agrichemical, petrochemical, sugar, and power generation industries. In addition, it has continued to provide bespoke structural steelwork constructions for these industries and has and will continue, to look to expand its activities in the fuel storage and on and offshore Oil & Gas industries, and in the renewable energy sector, especially the Biomass and Biogas sectors.

The group has continued to strive to expand its off-site fabrication activities and has and will continue to look for opportunities to deliver off-site fabricated pipe spools, skid structures and bespoke vessels, tanks, and general fabrications, produced in its workshops.

In addition, the group has continued to look for opportunities to sell its Project Management expertise and is actively looking to work with complimentary contracting businesses, offering services such as Design, Civil Engineering, Tank and Vessel construction and Electrical, Control and Instrumentation, in order that it can offer turnkey solutions to its clients.

Currently all these activities are expected to be confined to the UK.

DIVIDENDS

It has been decided to that dividends would only be paid to preference shareholders with no ordinary share dividends being paid for the year.

FUTURE DEVELOPMENTS

Future Developments of the Group are covered in the Strategic Report.

DIRECTORS

J M Key has held office during the whole of the period from 1 June 2024 to the date of this report.

Other changes in directors holding office are as follows:

D Razzell - resigned 23 April 2025

POLITICAL DONATIONS AND EXPENDITURE

The company and group made no political donations during the year.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Group Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Sygma Chartered Accountants, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

J M Key - Director

9 October 2025

Opinion

We have audited the financial statements of Pruce Newman Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2025 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 May 2025 and of the group's loss for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.

Other information

The director is responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Group Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Director.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page six, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the director is responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the group or the parent company or to cease operations, or has no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

The objectives of our audit in respect of fraud, are; to identify and assess the risks of material

misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit

evidence regarding the assessed risks of material misstatement due to fraud, through designing

and implementing appropriate responses to those assessed risks; and to respond appropriately to

instances of fraud or suspected fraud identified during the audit. However, the primary

responsibility for the prevention and detection of fraud rests with both management and those

charged with governance of the company.

Our approach was as follows:

- we obtained an understanding of the legal and regulatory requirements applicable to the

company and considered that the most significant are the Companies Act 2006, International

Financial Reporting Standards, and UK taxation legislation.

- we obtained an understanding of how the company complies with these requirements by

discussions with management and those charged with governance.

- we assessed the risk of material misstatement of the financial statements, including the risk of

material misstatement due to fraud and how it might occur, by holding discussions with

management and those charged with governance.

- we inquired of management and those charged with governance as to any known instances of

non-compliance or suspected non-compliance with laws and regulations.

- based on this understanding, we designed specific appropriate audit procedures to identify

instances of non-compliance with laws and regulations. This included making enquiries of

management and those charged with governance and obtaining additional corroborative evidence

as required.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Alan Brading FCA (Senior Statutory Auditor)

for and on behalf of Sygma Chartered Accountants

1 Sopwith Crescent

Wickford

Essex

SS11 8YU

9 October 2025

TURNOVER

8,762,789

9,194,309

Cost of sales

6,987,861

6,857,918

GROSS PROFIT

1,774,928

2,336,391

Administrative expenses

2,116,684

2,386,027

(341,756

)

(49,636

)

Other operating income

1,053

3,042

OPERATING LOSS

4

(340,703

)

(46,594

)

Interest receivable and similar income

533

139

(340,170

)

(46,455

)

Interest payable and similar expenses

5

28,119

83,036

LOSS BEFORE TAXATION

(368,289

)

(129,491

)

Tax on loss

6

(343,030

)

(49,855

)

LOSS FOR THE FINANCIAL YEAR

(25,259

)

(79,636

)

Loss attributable to:

Owners of the parent

(25,259

)

(79,636

)

LOSS FOR THE YEAR

(25,259

)

(79,636

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(25,259

)

(79,636

)

Total comprehensive income attributable to:

Owners of the parent

(25,259

)

(79,636

)

FIXED ASSETS

Intangible assets

8

1,046,182

1,206,148

Tangible assets

9

1,040,147

1,079,031

Investments

10

-

-

2,086,329

2,285,179

CURRENT ASSETS

Stocks

11

242,469

227,182

Debtors

12

1,576,375

1,987,619

Cash at bank and in hand

20,745

233,446

1,839,589

2,448,247

CREDITORS

Amounts falling due within one year

13

1,616,284

2,317,162

NET CURRENT ASSETS

223,305

131,085

TOTAL ASSETS LESS CURRENT LIABILITIES

2,309,634

2,416,264

CREDITORS

Amounts falling due after more than one year

14

(2,149,722

)

(2,200,164

)

PROVISIONS FOR LIABILITIES

18

(52,250

)

(83,180

)

NET ASSETS

107,662

132,920

CAPITAL AND RESERVES

Called up share capital

19

100,000

100,000

Retained earnings

20

7,662

32,920

SHAREHOLDERS' FUNDS

107,662

132,920

The financial statements were approved by the director and authorised for issue on 9 October 2025 and were signed by:

J M Key - Director

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

-

-

Investments

10

4,579,810

4,579,810

4,579,810

4,579,810

CREDITORS

Amounts falling due within one year

13

2,230,106

2,230,106

NET CURRENT LIABILITIES

(2,230,106

)

(2,230,106

)

TOTAL ASSETS LESS CURRENT LIABILITIES

2,349,704

2,349,704

CREDITORS

Amounts falling due after more than one year

14

1,905,568

1,905,568

NET ASSETS

444,136

444,136

CAPITAL AND RESERVES

Called up share capital

19

100,000

100,000

Retained earnings

344,136

344,136

SHAREHOLDERS' FUNDS

444,136

444,136

Company's profit for the financial year

-

56,250

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the director and authorised for issue on 9 October 2025 and were signed by:

J M Key - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 June 2023

100,000

112,556

212,556

Changes in equity

Total comprehensive income

-

(79,636

)

(79,636

)

Balance at 31 May 2024

100,000

32,920

132,920

Changes in equity

Total comprehensive income

-

(25,259

)

(25,259

)

Balance at 31 May 2025

100,000

7,661

107,661

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 June 2023

100,000

287,886

387,886

Changes in equity

Total comprehensive income

-

56,250

56,250

Balance at 31 May 2024

100,000

344,136

444,136

Changes in equity

Balance at 31 May 2025

100,000

344,136

444,136

Cash flows from operating activities

Cash generated from operations

1

(117,780

)

517,021

Interest paid

(28,119

)

(33,317

)

Finance costs paid

-

(49,719

)

Tax paid

125,148

31,874

Net cash from operating activities

(20,751

)

465,859

Cash flows from investing activities

Purchase of tangible fixed assets

(18,402

)

(26,051

)

Sale of tangible fixed assets

5,983

7,500

Interest received

533

139

Net cash from investing activities

(11,886

)

(18,412

)

Cash flows from financing activities

Loan repayments in year

(50,187

)

(106,187

)

Net cash from financing activities

(50,187

)

(106,187

)

(Decrease)/increase in cash and cash equivalents

(82,824

)

341,260

Cash and cash equivalents at beginning of year

2

(479,410

)

(820,670

)

Cash and cash equivalents at end of year

2

(562,234

)

(479,410

)

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

31.5.25

31.5.24

£

£

Loss before taxation

(368,289

)

(129,491

)

Depreciation charges

210,367

229,474

Loss on disposal of fixed assets

904

3,991

Finance costs

28,119

83,036

Finance income

(533

)

(139

)

(129,432

)

186,871

Increase in stocks

(15,287

)

(97,869

)

Decrease in trade and other debtors

573,166

587,422

Decrease in trade and other creditors

(546,227

)

(159,403

)

Cash generated from operations

(117,780

)

517,021

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 May 2025

31.5.25

1.6.24

£

£

Cash and cash equivalents

20,745

233,446

Bank overdrafts

(582,979

)

(712,856

)

(562,234

)

(479,410

)

Year ended 31 May 2024

31.5.24

1.6.23

£

£

Cash and cash equivalents

233,446

42,539

Bank overdrafts

(712,856

)

(863,209

)

(479,410

)

(820,670

)

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.6.24

Cash flow

At 31.5.25

£

£

£

Net cash

Cash at bank and in hand

233,446

(212,701

)

20,745

Bank overdrafts

(712,856

)

129,877

(582,979

)

(479,410

)

(82,824

)

(562,234

)

Debt

Debts falling due within 1 year

(218,978

)

(257

)

(219,235

)

Debts falling due after 1 year

(2,200,164

)

50,442

(2,149,722

)

(2,419,142

)

50,185

(2,368,957

)

Total

(2,898,552

)

(32,639

)

(2,931,191

)

1.	STATUTORY INFORMATION

Pruce Newman Group Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2022, is being amortised evenly over its estimated useful life of ten years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Intellectual property costs are being amortised evenly over their estimated useful life of four years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery

-

25% on reducing balance

Office equipment

-

25% on cost

Motor vehicles

-

25% on reducing balance

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

Financial instruments

The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset , with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.